Global engineering and construction deals insights: Q1 2018

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Executive summary

The beginning of 2018 can be marked by easing fiscal policy, tightening monetary policy, and turbulent trade policy. While changes in fiscal and monetary policy do not pose an immediate risk to economic growth, recent trade disputes could disrupt industry supply chains and in turn impact global GDP. Each of these trends has possible implications for M&A activity in the sector.

Lower corporate taxes will provide industry players with the capital to pursue acquisitions, although it is uncertain whether this will lead to increased M&A activity, as the easing fiscal policy could also benefit prospective sellers. Meanwhile, increasing interest rates would make debt financing more expensive, decrease stock valuations, and give companies with higher liquidity a competitive advantage.

On the trade side, we see conflict arising in several regions of the world. Recent tariffs on steel and aluminum are signs of increasing tension between the US and China. In addition, ongoing discussions around NAFTA may have further implications on the North American market. 


Key trends/highlights

  • Deal value in Q1 2018 was $14.5 billion, 57% lower than last quarter but only 4% lower than Q1 2017.
  • There were 567 deals this quarter, 16% lower than Q1 2017.
  • The average deal size was $78 million, 27% lower than the three-year quarterly average but up 20% from Q1 2017.
  • North America is trending upward as an M&A target, both in volume and value.
  • While domestic transactions continue to drive M&A volume, cross-border deals contributed to most of the value in Q1 2018.

“M&A activity in terms of value and volume slowed in Q1 2018 from Q4 2017 (down slightly from Q1 2017). While some of this is seasonal with holidays, including Lunar New Year, increased concerns around potential trade conflicts appear to be weighing. Of particular note is inbound activity from Asia in Q1 2018, which dropped to its lowest levels in the last three years. One quarter does not make the year, and we believe underlying sector fundamentals remain positive over the long term.”

Colin McIntyre, US Engineering and Construction Deals Leader

Contact us

Colin McIntyre
US Engineering and Construction Deals leader, PwC US
Tel: +1 (646) 818 7013

Michael Sobolewski
Engineering and Construction leader, PwC US
Tel: +1 (313) 394 3299

Jonathan Hook
Global Engineering and Construction leader, PwC US
Tel: +44 (0) 207-8044753

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